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Hostess sharpens focus on product innovation

LENEXA, KAN. — The success of new product innovation over the past year and how the company plans to project that growth into 2022 highlighted executive comments from leadership at Hostess Brands, Inc. during a March 1 Investor Day conference. Hostess product launches in 2021 were focused on engaging new consumer bases through inventive approaches to packaging, marketing and recipe formulation. The debuts of Baby Bundts and Crispy Minis, which both utilize portable, mess-free packaging targeted toward on-the-go snackers, stood out as innovation stars.

“(The) thing that we love about Crispy Minis is it really hits what the consumer is looking for,” said Daniel J. O’Leary, chief growth officer at Hostess Brands. “They’re looking for something that’s poppable. They’re looking for something in a packaging innovation that’s easy for multiple people to grab out of the bag. And as a result, it’s indexing quite well with our younger consumer.”

Under the leadership of Tina Lambert, vice president of innovation and growth at Hostess, the company’s innovation strategy relies on a systemic, analytical and data-driven approach.

“Our innovation revenue in 2021 exceeded our goal to have 15% of our annual revenue to come from new products launched in the past three years,” Ms. Lambert said. “We call the three-year rolling metric ‘Innovation Vitality,’ and we prioritize it to ensure our teams are focused on launching innovation that will be sticky in market, creating sustainable growth.”

Ms. Lambert credited Baby Bundts and Crispy Minis with driving last year’s growth.

“Baby Bundts is on track to be $40 million in retail sales in year one, and is the No. 1 innovation in our category,” Ms. Lambert said. “Crispy Minis targeted a new, younger consumer for the afternoon sharing snacking occasion, and has succeeded in bringing incremental growth to our business.”

Following the Innovation Vitality strategy, the company plans to pursue more incremental growth in 2022 with upcoming product launches. To propel these goals, Ms. Lambert explained that the company will continue to strengthen investments in people, processes and ideas.

“The power for us lies in a combination of innovation designed to bring incremental households into the franchise, and efficient marketing communication that will deliver a high return for our investment,” Ms. Lambert said.

Last month, Hostess debuted caffeinated Hostess Boost Jumbo Donuts in single-serve packages to be displayed near convenience store coffee counters. Mr. O’Leary said the initial launch of the Boost donuts generated more than 1 billion consumer impressions and because of its novelty will help the company increase its incremental distribution. This kind of innovation takes advantage of what Ms. Lambert called “targeted usage occasions.”

“We are pushing ourselves to ideate in new territories, exploring new product forms and new packaging forms,” Ms. Lambert said. “And our innovation approach is not one-size-fits-all. We customize innovation for each of our priority retail channels with a focus on our profitable and advantaged convenience store business.”

Upcoming product launches include Hostess Bouncers and a number of cookies from Hostess subsidiary, Voortman Cookies Ltd. The Bouncers will come in three cream-filled versions, including Twinkies, Ding Dongs and cinnamon Donettes, targeting millennial parents looking for portable, sweet snacks on the go. Voortman is debuting sugar-free mini cookies, available in iced oatmeal and vanilla shortbread flavors, as well as re-introducing peanut butter cream wafers and sugar-free peanut butter cream wafers after supply chain issues caused a temporary suspension.

The mini cookies, sweetened using maltitol and maltitol syrup, and the wafers, made with peanut butter, are both marketed toward health-conscious consumers. Mr. O’Leary credited much of the Voortman brand’s growth with the trend of “aging without compromise.” The brand opens doors for incremental growth in both the aging and the health-conscious markets, which have a large overlap with one another, he said.

“We know that as consumers age, they become more concerned with blood sugar and diabetes,” Mr. O’Leary said. “But they also don’t want to give up their favorite sweet treats. …We are seeing this trend start younger and younger, and it’s helping drive strong Voortman sales growth on our sugar-free business, which is up a whopping 23% versus a year ago.”

While there are certainly areas of overlap, reviewing the five major Hostess product launches from 2021-22 reveals a wide range of market appeal, including parents, the elderly, young men, those who are health-conscious and people looking for portable snacks. This kind of scope offers many market access points, ultimately increasing the effectiveness and longevity of Ms. Lambert’s Innovation Vitality strategy.

“(Over) the last few years, we did not let up on the pace of innovation at all,” Mr. O’Leary said. “…we really chose to focus on the innovation. And to Tina’s point about vitality, we think that is a decision that’s going to bear fruit in the years to come.”

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